Financial Institution Money Is Flowing to Washington Politicians At Record Highs

Americans for Financial Reform (AFR) announced today that the U.S. financial industry is spending even more money to influence decision making in Washington than it did before the 2007-2008 financial crisis. The AFR, a nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups published “Wall Street Money in Washington” this morning. The spending, of almost $2 billion, in this cycle was the highest yet for a non-presidential year. It is over 35% higher than the last non-presidential election year and represents more than $2.5 million per day.

A total of 443 financial sector companies and trade associations spent at least $500,000 each during this period. According to AFR, “This continued high level of spending reflects the ongoing battle to reshape the financial system and the industry’s persistent efforts to repeal or win exemptions from parts of the Dodd-Frank financial reform law, to weaken implementing regulations, to further deregulate, and to forestall proposals for accountability and change.”

By a significant margin, the largest spender is the National Association of Realtors, $144,716,676. Bloomberg LP is second, $96,481,469, and in a much farther behind third place is the American Bankers Association (ABA), $25,769,494. While bank campaign contributions to Washington politicians were significant, the much larger, individual contributors are the non-banks such as Bloomberg, Paloma Partners, Citadel, and Soros Fund Management.

Given all the challenges that Wells Fargo is engulfed in, I should not be surprised that Wells Fargo contributed $11 million dollars to politicians. However, such a level of contributions would probably be better spent on repaying customers who were victimized by the bank and invested in improving risk management at Wells Fargo.

The National Association of Realtors and Bloomberg are the largest spenders.

Data source: Center for Responsive Politics

The report’s data shows that the financial industry reported spending a total of $956,890,939 on lobbying in calendar years 2017 and 2018. This puts the sector in third place, behind the “Health” sector, which spent $1,115,361,895 and “Miscellaneous Business” companies and trade associations, which spent $1,021,250,345. The Miscellaneous Business category includes some groups, such as the US Chamber of Commerce ($189,356,496 total expenditures), that also conduct a significant amount of lobbying on financial issues. In calendar year 2017, there were 2,211 registered lobbyists working for the financial sector and in calendar year 2018, there were 2,177.

Financial sector is the third largest contributor after healthcare and other businesses.

AFR

According to the Center for Responsive Politics, in 2018, the total lobbying contributions from Finance, Insurance & Real Estate (FIRE) was $534,105,859.

Annual lobbying on finance, real estate and insurance.

Center for Responsive Politics

Within finance, insurance companies, by far, gave the largest lobbying contributions.

Of the $519,619,263 in party-coded contributions by individuals and PACs associated with finance, 53% went to Republicans and 47% went to Democrats.

Republicans are the largest recipients of contributions.

AFR

Candidates, who won their races in November 2018 and are now members of Congress, received $230,071,266 in 2017-18 to their campaign committee contributions from the financial sector and leadership PACs totaling (reported through February 12, 2019). This represents an average of $430, 845. The top recipient was Republican Representative Kevin McCarthy of California, who received $3.6 million.

Top ten contribution recipients

Data source: Center for Responsive Politics

The AFR report explains that the lobbying amounts reflect only the expenditures for registered lobbyists. “They do not include the (often quite significant) additional money spent for essential contributory research and support staff who are not lobbyists, for people who do work that plain English would call lobbying but is not officially registered lobbying, nor for other activities financial firms engage in to influence regulators and legislators like communications, advertising, contracting for outside research, and filing lawsuits.”